Market Ticker on Barney Frankhttps://www.lotterypost.com/blogentry/31757
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https://www.lotterypost.com/blogentry/31757Thu, 30 Jul 2009 13:58:59 GMTkonanePoliticians love to make people think they have their best interest at heart when it translates to the opposite in real life. Some of you are going to love this.

Cram-downs let federal judges lengthen terms, cut interest rates and reduce mortgage balances of bankrupt homeowners, even if the lender objects. Congress gave the mortgage industry every legislative tool it requested to allow them to more easily modify loans for those facing foreclosure, and the results have been below expectations, Frank said in a statement today.

Americans: He's lying but he desperately wants you think he cares about you.

He does not.

Here's the math:

There are about ~13-15 million homes that are underwater in this country - that is, the mortgage outstanding exceeds the current market value.

The math takes a bit to derive but this is the best guess I've got given the data available in the various MSAs, the decline in Case-Schiller, bubble pricing the new and existing home sales from 2003 to present.

The average home that is underwater is at helium depth to the tune of about $75,000. Some much more ($300,000) and some significantly less (e.g. $20,000.)

Now let's modify them all so they're no longer underwater! That is, simply forgive principal down to current market value.

Ok: That's 975 billion dollars, or close to a trillion.

Guess who eats it? The banks. What happens if the banks are forced to recognize a trillion dollars in losses that they have (so far successfully) managed to shove under the carpet and pretend that they do not exist?